Conversations

Dialogue, discourse, intergenerational exchange of ideas, interdisciplinary discussion, provocative questions from peers. Conversations spring from critical queries, new paths of investigation, trending topics, and age-old conflicts with a give and take in the true spirit of Chicago Booth.

conversations

What Is the Business Potential of Blockchain?

Eric Budish is professor of economics and a director of the Initiative on Global Markets at Chicago Booth, as well as a research associate at the National Bureau of Economic Research. His recent paper on cryptocurrency, titled “The Economic Limits of Bitcoin and the Blockchain,” was published in June: "I’m skeptical that Bitcoin—or other similar cryptocurrencies—will become what cryptocurrency believers fantasize about. Some fantasize it will become the global currency or a global store of value like gold. Some imagine it will become an important part of the global financial system, another currency alongside dollars and euros that moves around the world in serious quantities. My paper is trying to make an argument that’s quite skeptical of these possibilities. Satoshi Nakamoto, the anonymous founder of Bitcoin, came up with an ingenious way of creating trust in a database without a centralized, trusted party. I respect it as a computer science innovation, but my research shows it’s a really expensive way to generate trust because it’s only as trustworthy as the cost of attacking it. That cost is within the reach of eccentric billionaires, and certainly within the reach of a nation. Elon Musk could not attack the US Federal Reserve system, but he could attack Bitcoin. <br/>